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Clips are short pieces of audio or MIDI data and are the most basic element in Project5. They can be loops, they can be short linear phrases (for instance, a bass line in a chorus), or they can be a whole Track. Project5 doesn’t care about the content, it just thinks about Clips. A Clip is the fundamental element from which a song or performance is constructed.
From a workflow perspective, both Audio and MIDI/Instrument Clips are treated identically, so you don’t need to think about what the underlying data is. Instead, you can think in terms of your song/Project.